A note from Michael Bond, Head of Surety for North America:
As you know, current legislation has a direct impact on our business. Whether it’s the Fed changing rates, an industry in distress, or a court cases with massive legal implications (such as cases involving small business set asides (e.g. United States ex rel. Scollick v. Narula), current legal issues affect our business.
This is why I’m very pleased to introduce Rob Duke, dedicated Legal Counsel for Euler Hermes surety. Rob is a key resource brought onboard to provide insight and guidance on legal issues affecting our customers, as well as ensure our contracts are grade-A compliant.
Each month, Rob will be writing a blog post that provides updates on current legislation and reported court decisions that directly impact our clients and the industries in which we operate. In this post, you’ll have a chance to get to know Rob, hear about his background, and find out what to look forward to each month. Please join me in welcoming Rob to our growing team!
Managing Risk Associated with a Surety Bond
It has been over thirty years since I responded to a job advertisement to become a surety underwriter. Nevertheless, I still remember the ad and how the position required a “working knowledge” in a variety of subjects, including contract law.
Now, with the perspective of years of experience as a surety underwriter, a bond producer, and General Counsel for The Surety & Fidelity Association of America, the requirement makes perfect sense.
As surety bond professionals, we are in the risk business. A critical factor in the success of a surety company or a bond producer is properly assessing and managing the risk associated with a surety bond. Legal issues and risk are inseparable.
In the case of performance and payment bonds, legal issues, such as the terms and conditions of our construction contractor’s contract, statutes requiring remote subcontractors to provide notice of nonpayment to the contractor or a regulation establishing a goal for small and minority contractor participation on a construction project, affect the risk presented by the bonds. An awareness of these legal issues helps us to be more effective in crafting surety transactions that end with a successful result – a fully performed (and loss free) obligation.
Once a month, I will be sharing with you recent cases, legislation and other legal developments that affect the surety line of business. My hope is that the information provided will help you enhance your awareness of the legal issues and developments that affect our customers. What was true thirty years ago is true today – a “working knowledge” of surety legal issues is essential in building sustainable surety solutions.
Each month in the Euler Hermes Surety blog, I’ll be discussing current legislation and court decisions affecting the industry and sharing my thoughts.